Art of presentation;

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VOL. XIII (QUARTERLY) NEW YORK, APRIL, 1930 No. 2
The Art of Presentation
T H E evolution of accounting has carried
that utility from a stage where it was
looked upon as a device for exhibiting fig­ures,
to a point where, if intelligently used,
it may be made to present, in terms of
dollars, illuminated pictures of processes
and results.
One hesitates to use the word "art" in
referring to a balance sheet, lest some wag
unearth his dictionary from underneath a
dusty pile of accumulated newspapers and
discover that the word "art" may be de­fined
as "the embodiment of beautiful
thought in sensuous forms." Yet, there is
an art of balance sheet presentation.
The art in relation to the balance sheet
consists in formulating rules to depict re­sults,
conditions, relationships, and ten­dencies.
In reference to the income state­ment
it consists in developing rules which
will result in showing and relating causes.
Much has been accomplished in the
formation of technique in the presentation
of financial statements. In this process
more emphasis has been placed on the
balance sheet than on the income state­ment.
Classification, grouping, and order
in arrangement have served in the balance
sheet to bring out the division of capital
according to its uses; to show the equities,
and the priority of liens. Not the least of
the improvements has been the classifica­tion
of surplus according to its derivation.
The income statement has been im­measurably
improved with the passing of
time. First, it was a copy of the profit and
loss account. Next, the statement was
expanded into a sectionalized affair so as
to show separately manufacturing, trading
and profits, expenses, and losses. Now,
there is a fairly uniform type of statement
which is characterized by a stepping down
of profits and general lines of demarcation
among operating, general, financial and
miscellaneous results.
There are two aspects of presentation
which, considerably neglected in the past,
probably will receive attention, or at least
be subjected to refinement in the future.
The first is a hook-up between the income
statement and the balance sheet which
will show the profits imputed to the turn­over
of current assets as affected by the
current liabilities, together with the load
imposed on those profits by the indirect
service, or non-service assets.
The second aspect is a prolongation of
the income statement so as to show the
application of profits. At the present time
the statement is allowed to rest with show­ing
the amount distributed as dividends
and the remainder carried to surplus.
There is an opportunity for a constructive
step here in showing the status of the profit
remaining after dividends, that is, whether
it has been invested in fixed assets, or re­mains
in the current group.
Such imposition would do much to clear
up the fog which exists as to the avail­ability
of profits for future dividends.